Report: ‘Deepwater barrels are replacing shale as the low-cost barrel’

Offshore E&P activity is undergoing a “structural evolution” according to a recent Energy & Power report from Melius Research, a New York City-based investment research and data analytics firm. 

While basins have become increasingly mature, the report noted that global volumes of oil and gas resources approved for development have remained depressed (-40%) since the shale revolution in the 2000s. The industry has moved towards "doing more with less"; expanding or redeveloping existing fields (60% of recent approvals) rather than pursuing new facilities.

“We see a paradigm shift underway; deepwater barrels are replacing shale as the low-cost barrel, positioning offshore activity to increase,” the report said.

“The share of offshore development has ticked up to 70% of recent approvals vs. 40% in the prior decades,” the report commented.

It added: “Exploration and production spending must increase to support current levels of oil and gas production and meet incremental oil and gas demand – we see this as an opportunity for oilfield service companies in our coverage with offshore exposure.”